Federalist No. 36

The Same Subject Continued:
Concerning the General Power of Taxation
From the New York Packet.
Tuesday, January 8, 1788.

Author: Alexander Hamilton

To the People of the State of New York:

WE HAVE seen that the result of the observations, to which the
foregoing number has been principally devoted, is, that from the
natural operation of the different interests and views of the
various classes of the community, whether the representation of the
people be more or less numerous, it will consist almost entirely of
proprietors of land, of merchants, and of members of the learned
professions, who will truly represent all those different interests
and views. If it should be objected that we have seen other
descriptions of men in the local legislatures, I answer that it is
admitted there are exceptions to the rule, but not in sufficient
number to influence the general complexion or character of the
government. There are strong minds in every walk of life that will
rise superior to the disadvantages of situation, and will command
the tribute due to their merit, not only from the classes to which
they particularly belong, but from the society in general. The door
ought to be equally open to all; and I trust, for the credit of
human nature, that we shall see examples of such vigorous plants
flourishing in the soil of federal as well as of State legislation;
but occasional instances of this sort will not render the reasoning
founded upon the general course of things, less conclusive.

The subject might be placed in several other lights that would
all lead to the same result; and in particular it might be asked,
What greater affinity or relation of interest can be conceived
between the carpenter and blacksmith, and the linen manufacturer or
stocking weaver, than between the merchant and either of them? It
is notorious that there are often as great rivalships between
different branches of the mechanic or manufacturing arts as there
are between any of the departments of labor and industry; so that,
unless the representative body were to be far more numerous than
would be consistent with any idea of regularity or wisdom in its
deliberations, it is impossible that what seems to be the spirit of
the objection we have been considering should ever be realized in
practice. But I forbear to dwell any longer on a matter which has
hitherto worn too loose a garb to admit even of an accurate
inspection of its real shape or tendency.

There is another objection of a somewhat more precise nature
that claims our attention. It has been asserted that a power of
internal taxation in the national legislature could never be
exercised with advantage, as well from the want of a sufficient
knowledge of local circumstances, as from an interference between
the revenue laws of the Union and of the particular States. The
supposition of a want of proper knowledge seems to be entirely
destitute of foundation. If any question is depending in a State
legislature respecting one of the counties, which demands a
knowledge of local details, how is it acquired? No doubt from the
information of the members of the county. Cannot the like knowledge
be obtained in the national legislature from the representatives of
each State? And is it not to be presumed that the men who will
generally be sent there will be possessed of the necessary degree
of intelligence to be able to communicate that information? Is the
knowledge of local circumstances, as applied to taxation, a minute
topographical acquaintance with all the mountains, rivers, streams,
highways, and bypaths in each State; or is it a general
acquaintance with its situation and resources, with the state of
its agriculture, commerce, manufactures, with the nature of its
products and consumptions, with the different degrees and kinds of
its wealth, property, and industry?

Nations in general, even under governments of the more popular
kind, usually commit the administration of their finances to single
men or to boards composed of a few individuals, who digest and
prepare, in the first instance, the plans of taxation, which are
afterwards passed into laws by the authority of the sovereign or
legislature.

Inquisitive and enlightened statesmen are deemed everywhere best
qualified to make a judicious selection of the objects proper for
revenue; which is a clear indication, as far as the sense of
mankind can have weight in the question, of the species of
knowledge of local circumstances requisite to the purposes of
taxation.

The taxes intended to be comprised under the general
denomination of internal taxes may be subdivided into those of the
DIRECT and those of the INDIRECT kind. Though the objection be made
to both, yet the reasoning upon it seems to be confined to the
former branch. And indeed, as to the latter, by which must be
understood duties and excises on articles of consumption, one is at
a loss to conceive what can be the nature of the difficulties
apprehended. The knowledge relating to them must evidently be of a
kind that will either be suggested by the nature of the article
itself, or can easily be procured from any well-informed man,
especially of the mercantile class. The circumstances that may
distinguish its situation in one State from its situation in
another must be few, simple, and easy to be comprehended. The
principal thing to be attended to, would be to avoid those articles
which had been previously appropriated to the use of a particular
State; and there could be no difficulty in ascertaining the revenue
system of each. This could always be known from the respective
codes of laws, as well as from the information of the members from
the several States.

The objection, when applied to real property or to houses and
lands, appears to have, at first sight, more foundation, but even
in this view it will not bear a close examination. Land taxes are
co monly laid in one of two modes, either by ACTUAL valuations,
permanent or periodical, or by OCCASIONAL assessments, at the
discretion, or according to the best judgment, of certain officers
whose duty it is to make them. In either case, the EXECUTION of the
business, which alone requires the knowledge of local details, must
be devolved upon discreet persons in the character of commissioners
or assessors, elected by the people or appointed by the government
for the purpose. All that the law can do must be to name the
persons or to prescribe the manner of their election or
appointment, to fix their numbers and qualifications and to draw
the general outlines of their powers and duties. And what is there
in all this that cannot as well be performed by the national
legislature as by a State legislature? The attention of either can
only reach to general principles; local details, as already
observed, must be referred to those who are to execute the
plan.

But there is a simple point of view in which this matter may be
placed that must be altogether satisfactory. The national
legislature can make use of the SYSTEM OF EACH STATE WITHIN THAT
STATE. The method of laying and collecting this species of taxes in
each State can, in all its parts, be adopted and employed by the
federal government.

Let it be recollected that the proportion of these taxes is not
to be left to the discretion of the national legislature, but is to
be determined by the numbers of each State, as described in the
second section of the first article. An actual census or
enumeration of the people must furnish the rule, a circumstance
which effectually shuts the door to partiality or oppression. The
abuse of this power of taxation seems to have been provided against
with guarded circumspection. In addition to the precaution just
mentioned, there is a provision that "all duties, imposts, and
excises shall be UNIFORM throughout the United States.''

It has been very properly observed by different speakers and
writers on the side of the Constitution, that if the exercise of
the power of internal taxation by the Union should be discovered on
experiment to be really inconvenient, the federal government may
then forbear the use of it, and have recourse to requisitions in
its stead. By way of answer to this, it has been triumphantly
asked, Why not in the first instance omit that ambiguous power, and
rely upon the latter resource? Two solid answers may be given. The
first is, that the exercise of that power, if convenient, will be
preferable, because it will be more effectual; and it is impossible
to prove in theory, or otherwise than by the experiment, that it
cannot be advantageously exercised. The contrary, indeed, appears
most probable. The second answer is, that the existence of such a
power in the Constitution will have a strong influence in giving
efficacy to requisitions. When the States know that the Union can
apply itself without their agency, it will be a powerful motive for
exertion on their part.

As to the interference of the revenue laws of the Union, and of
its members, we have already seen that there can be no clashing or
repugnancy of authority. The laws cannot, therefore, in a legal
sense, interfere with each other; and it is far from impossible to
avoid an interference even in the policy of their different
systems. An effectual expedient for this purpose will be, mutually,
to abstain from those objects which either side may have first had
recourse to. As neither can CONTROL the other, each will have an
obvious and sensible interest in this reciprocal forbearance. And
where there is an IMMEDIATE common interest, we may safely count
upon its operation. When the particular debts of the States are
done away, and their expenses come to be limited within their
natural compass, the possibility almost of interference will
vanish. A small land tax will answer the purpose of the States, and
will be their most simple and most fit resource.

Many spectres have been raised out of this power of internal
taxation, to excite the apprehensions of the people: double sets of
revenue officers, a duplication of their burdens by double
taxations, and the frightful forms of odious and oppressive
poll-taxes, have been played off with all the ingenious dexterity
of political legerdemain.

As to the first point, there are two cases in which there can be
no room for double sets of officers: one, where the right of
imposing the tax is exclusively vested in the Union, which applies
to the duties on imports; the other, where the object has not
fallen under any State regulation or provision, which may be
applicable to a variety of objects. In other cases, the probability
is that the United States will either wholly abstain from the
objects preoccupied for local purposes, or will make use of the
State officers and State regulations for collecting the additional
imposition. This will best answer the views of revenue, because it
will save expense in the collection, and will best avoid any
occasion of disgust to the State governments and to the people. At
all events, here is a practicable expedient for avoiding such an
inconvenience; and nothing more can be required than to show that
evils predicted to not necessarily result from the plan.

As to any argument derived from a supposed system of influence,
it is a sufficient answer to say that it ought not to be presumed;
but the supposition is susceptible of a more precise answer. If
such a spirit should infest the councils of the Union, the most
certain road to the accomplishment of its aim would be to employ
the State officers as much as possible, and to attach them to the
Union by an accumulation of their emoluments. This would serve to
turn the tide of State influence into the channels of the national
government, instead of making federal influence flow in an opposite
and adverse current. But all suppositions of this kind are
invidious, and ought to be banished from the consideration of the
great question before the people. They can answer no other end than
to cast a mist over the truth.

As to the suggestion of double taxation, the answer is plain.
The wants of the Union are to be supplied in one way or another; if
to be done by the authority of the federal government, it will not
be to be done by that of the State government. The quantity of
taxes to be paid by the community must be the same in either case;
with this advantage, if the provision is to be made by the Union
that the capital resource of commercial imposts, which is the most
convenient branch of revenue, can be prudently improved to a much
greater extent under federal than under State regulation, and of
course will render it less necessary to recur to more inconvenient
methods; and with this further advantage, that as far as there may
be any real difficulty in the exercise of the power of internal
taxation, it will impose a disposition to greater care in the
choice and arrangement of the means; and must naturally tend to
make it a fixed point of policy in the national administration to
go as far as may be practicable in making the luxury of the rich
tributary to the public treasury, in order to diminish the
necessity of those impositions which might create dissatisfaction
in the poorer and most numerous classes of the society. Happy it is
when the interest which the government has in the preservation of
its own power, coincides with a proper distribution of the public
burdens, and tends to guard the least wealthy part of the community
from oppression!

As to poll taxes, I, without scruple, confess my disapprobation
of them; and though they have prevailed from an early period in
those States [1] which have
uniformly been the most tenacious of their rights, I should lament
to see them introduced into practice under the national government.
But does it follow because there is a power to lay them that they
will actually be laid? Every State in the Union has power to impose
taxes of this kind; and yet in several of them they are unknown in
practice. Are the State governments to be stigmatized as tyrannies,
because they possess this power? If they are not, with what
propriety can the like power justify such a charge against the
national government, or even be urged as an obstacle to its
adoption? As little friendly as I am to the species of imposition,
I still feel a thorough conviction that the power of having
recourse to it ought to exist in the federal government. There are
certain emergencies of nations, in which expedients, that in the
ordinary state of things ought to be forborne, become essential to
the public weal. And the government, from the possibility of such
emergencies, ought ever to have the option of making use of them.
The real scarcity of objects in this country, which may be
considered as productive sources of revenue, is a reason peculiar
to itself, for not abridging the discretion of the national
councils in this respect. There may exist certain critical and
tempestuous conjunctures of the State, in which a poll tax may
become an inestimable resource. And as I know nothing to exempt
this portion of the globe from the common calamities that have
befallen other parts of it, I acknowledge my aversion to every
project that is calculated to disarm the government of a single
weapon, which in any possible contingency might be usefully
employed for the general defense and security.

I have now gone through the examination of such of the powers
proposed to be vested in the United States, which may be considered
as having an immediate relation to the energy of the government;
and have endeavored to answer the principal objections which have
been made to them. I have passed over in silence those minor
authorities, which are either too inconsiderable to have been
thought worthy of the hostilities of the opponents of the
Constitution, or of too manifest propriety to admit of controversy.
The mass of judiciary power, however, might have claimed an
investigation under this head, had it not been for the
consideration that its organization and its extent may be more
advantageously considered in connection. This has determined me to
refer it to the branch of our inquiries upon which we shall next
enter.